Microsoft Sees Seeds of Brand Building in RTB

In the last three years, Microsoft has metamorphosed from a laggard to something of a leader in the exchange-traded media space. After a false start with its AdECN RTB platform, it now puts all, or nearly all, of its non-reserved inventory on its own ad exchange, which is powered by AppNexus.

Daniel Sheinberg is senior director of display marketplaces in the company's advertising business group.He will speak at AdExchanger’s upcomingHuman Centered Automationconference on September 20.

Do you see specific evidence that programmatic media works for brand building, or is that still theoretical?

We are seeing the first signs of more brand-building happening in RTB and advertisers feeling like they're gaining success through it. We've had a few large advertisers come to us and say, "Hey, we're shifting a lot of the audience buying that we've been doing to RTB."

That audience buying is not just with a perspective of, "We're going to measure this on click through rate and CPA," but also audience-buying where we're looking at it with reach and frequency metrics, mapping it to awareness, online and offline.

We are seeing the beginnings of that, but it's early in the process. We see it ourselves. We at Microsoft Advertising play in the programmatic buying space on a few different levels. We're selling inventory. We're also out, programmatically buying inventory ourselves to feed into network campaigns that have both branding objectives as well as DR objectives.

Then also, as an exchange operator ourselves, we also have that perspective on it. How are publishers coming to that space? How are advertisers coming to it?

What is Microsoft doing to scale brand safe inventory available for RTB?

We have been one of the more aggressive premium publishers in that we moved fairly early in the game to putting all of our non‑reserved inventory onto our exchange, more than 95 percent of our inventory. In doing that, I think we showed a lot of confidence in the prospect of RTB. We also did it in a pretty measured way, in that we did not put our inventory out there with full transparency.

We did provide some insight into a high level of what the inventory bins would include. We also have been pretty focused on leveraging yield management controls to try to make sure that we're managing across the different sales channels we have.

Over time, we continued to experiment with ways we can make that inventory more attractive to exchange buyers and exchange bidders. What are the things that we can test, where we can understand the monetization impact of changing transparency settings, for example, or adjusting price for it?

Our approach has been, let's grow the liquidity of the pool of available inventory, and then let's learn what works well for us. I think other premium publishers have taken different paths, where some of the private exchange approaches folks have taken have been much more restrictive.

It's hard to know what people even mean when they talk about a private exchange. In a lot of cases, publishers say, "Here's some small set of my inventory that I'm going to make available, and some small number of demand sources that I'm going to enable on that inventory."

There have been some successes, but it hasn't had the big impact that folks are looking for, because it doesn't really help with creating a great deal of scale. That is certainly one of the main promises of RTB -- finding your audience at scale.

Do you view private exchanges as a steppingstone for publishers to get comfortable with RTB?

It is a steppingstone or a toe in the water, but I'm concerned that it's not going to be a successful one. Because it's not creating the scale that the buy side needs, the publishers who are engaging it in those limited ways are not going to see the impact that they're looking for. Those turn into automated ways to execute on deals that might have been executed on anyway.

What you possibly get is the ability for the buy side to globally manage things like frequency gaps. You're executing a deal, basically, through that private exchange. Then the marketer behind that deal, because it's running through their DSP, can now understand how does that campaign tie into all the other campaigns that are running through the DSP.

Like I said, I'm not sure that that's something that really scales up and creates an additional accretive demand source for those publishers.

What's your take on the shift to viewable impressions?

I'm always a little surprised by it. In television, nobody seems that concerned about how many people went to the kitchen during the commercial break. Yeah, it goes back to the fact that we can measure it and so we're held to the standard of, then you have to measure everything and it's got to be perfect.

But I do feel a great opportunity in viewability is on the storytelling side. I think one of the things that as an industry we haven't done enough of is creating that storytelling opportunity through multiple engagements with the same person across devices, across experiences, over the course of time.

If you have the viewability metrics, then you probably feel more confident about what have people seen, what messages have gotten across. If you're trying to sequence a story over time, viewability starts to become pretty important to that.

How did it come about that Microsoft prioritized RTB and programmatic media?

This predates me so I don't feel like I'm blowing my own horn here. I think we've got people in the organization who looked ahead at where the industry was going and felt like RTB had a value proposition that was going to be realized over time. Even if you go back to the AdECN acquisition, that was an early indicator of our interest in this phase. As we ended up taking it to market and ended up deciding to leverage the AppNexus platform as the way in, it was still an evolution of that thinking that this is an area where the industry is going to grow and we want to be a part of it.

Does Microsoft think of itself more as a media seller or a platform company when it comes to this RTB programmatic space?

It's kind of "yes." That's a hard question, because if you think about it, we've talked about from the publisher point of view and the Microsoft Advertising Exchange. We are bringing other publishers into that as well. If you followed our partnership with WPP's 24/7 Media [AdExchanger story], we're bringing their inventory into the Microsoft Advertising Exchange. It's an opportunity for them to leverage our learning in the way that we think it is most impactful and positive for publishers to bring inventory to market. It also creates that greater liquidity and scale on the exchange. It's a better pool of inventory for the buy side to optimize for.

Then, the other side of it is we're buying programmatically. When we're sourcing inventory for our ad network ‑‑ we're starting to do more of that through RTB ‑‑ we see that side of the ecosystem too and what works for us, as a buyer, is inventory. A significant amount of our partnership, our alliance, with Yahoo And AOL, we're executing a lot of that through real‑time buying into their inventory.

We really do have that full perspective on all the different ways that RTB contributes to the ecosystem. We're actively learning in all those areas.

Do you think the definition of programmatic media broadens with the launch of Facebook Exchange and other social platforms that may want to tap RTB demand, but do it with their own native ad formats?

I don't know that I think of that necessarily as a broader definition of RTB. I certainly think of it as a potential for broader application of RTB. This touches on some of where I go with my AdExchanger conference presentation.

As an inventory source, as a publisher, somebody like a Facebook or a Twitter is in a rare position where they, on their own, can say, "I want to create an exchange based on my inventory and it's an ad format that nobody else really uses, but you, as a marketer, there's enough scale here for it to be interesting to you." I think part of that challenge is, as you go to the native ad format, as publishers start to look at advertising within their services that fit with the user experience, you've got to figure out how to enable that advertising experience at a scale that works for marketers.

I think that will be the challenge of growing RTB across all these different opportunities is how can we make sure that I can run my campaign and tell my story at the scale I want to, understanding that there are all these different experiences out there that my message has to get through? I definitely think that that's going to be an important part of how can RTB grow.

Just to tie it back to some of the things you've heard from Microsoft Advertising recently are these things we think about. That is the promise behind polymorphic advertising, is that idea of how do we make it easier for a marketer to tell their story across many potential ad formats?

Will there still be a big role for dedicated creative agencies?

I definitely think so.

As for the storytelling part of RTB, I spoke before about sequential storytelling. That's not something we see enough of in the digital advertising scene. RTB is dominated right now, on the buy and sell side, by quantitative folks. That's not surprising. We've been looking at it largely as a performance‑driven industry. There's obviously a lot of math and science that you can bring to try and solve these problems

There is the opportunity for the art to start to come through more. It's definitely a big opportunity and one that I haven't seen people really seize on just yet.